In an article on March 15, the New York Times asked whether it is time to "retrain" business schools.
The answer is (obviously) yes. The article made the Times' "most popular" list and 188 comments were posted about it on the Times' website, with most readers regarding B-schools and MBAs with anger, loathing and contempt.
I thought that it was interesting that relatively few reader comments mentioned incorporating sustainability into business school training. Surely, a curriculum incorporating some aspects of sustainability would give business school students a wider view of the world and foster reconsideration of the B-School mantra that the firm's sole responsibility is to maximize shareholder value. One New York Times reader, vkh of Olympia, Washington, did indeed make this suggestion -- comment 181 of 188. No one had recommended vkh's post until I did, and let me give vkh wider exposure here.
I imagine that close to all of the readers of this column are rolling their eyes at this point, half because they doubt that the B-schools can be salvaged, and the other half because they find the notion of sustainability suspect in the context of business theory ("too touchy-feely"). But bear with me for a moment, because I do have some standing on the matter.
While many readers may view it as a black mark, I have an MBA. Eventually, I used it to start a company dedicated to green real estate finance, investment, development and management. My company was created on the premise that sustainable buildings make a superior investment vehicle, and that premise has held up pretty well as the economy has tanked. And my own experience in the business world has demonstrated to me fairly conclusively that business and sustainability have quite a bit to teach each other.
As to what sustainability can teach the B-schools:
Sustainability looks at economic decisions over decades or generations (forget about the traditional 3- to 10-year hold, much less a single-minded focus on quarter-to-quarter profitability), and implicitly asks how business decisions affect all stakeholders associated with the firm, including shareholders, employees, communities, nations and the planet. As such, sustainability is an excellent antidote to the narrow emphasis on quarterly results that drives many public companies, and the dictum that the only thing that matters is the maximization of shareholder value. (I went to B-school during the "greed is good" 1980s, and can attest that the core values taught in my finance classes were that markets were always correct and that the only thing that mattered was shareholder value maximization. To the extent that MBAs viewed these mantras without nuance, it's little wonder that we've ended up in the fix we're in.)
As to what the B-schools can teach advocates of sustainability:
The skills taught in business school, including discounted cash flow and risk modeling, marketing strategy and management can be used to provide analytic muscle to business plans for green products and services. I am all for life cycle analysis, but your banker probably speaks a different language (whether that should be changed is a topic for another column). The tools taught in B-schools are practical and powerful, and can be used wisely to create a more sustainable future. As well, business schools encourage teamwork, pragmatism and a can-do ethic -- certainly mine did.
Many business schools are introducing green MBA curricula, and I applaud them. I'm hoping that these new programs also incorporate the concepts of environmental and business stewardship and the notion that multiple stakeholders -- including employees, communities, nations, future generations and, yes, shareholders -- need to be served by private enterprise. These tenets of sustainability are sound counterweights to the maxim that the shareholder is all.
Leanne Tobias is founder and principal of Malachite LLC, an advisory firm that specializes in the development, leasing, management, financing and certification of sustainable or green real estate on a global basis. Comment online, or write to Leanne about your green real estate thoughts and experiences at greenstimulus@malachitellc.com. She'll share the best of reader feedback in future posts.
Image by SXC user jussstas.